The SM market remains bearish. Following disrupted sales in past two months, traders lost confidence and hurried to sell in a bid to minimize losses. Most of them turned focus on other products with a question that why SM market is so sluggish.
End-users of SM, including ABS, PS, EPS, UPR and SBL producers, are in busy season and ran at high rates. They accept the feedstock prices and purchase actively.
As for supply, Zhenhai Refining is unlikely to start its 620,000tonne/year SM unit in May. Tianjin Dagu’s 500,000tonne/year SM unit suffered from unexpected shutdown in the month. No arrivals of Irani Pars cargoes are seen in May. Fushun PC suddenly decided to shut down its 60,000tonne/year unit for ever, resulting in supply shortage in northeast China. Shandong Yuhang’s 200,000tonne/year ethanol-based unit has prepared well for offline at any time on malfunctions.
Import inventories at ports are expected to decrease to normal levels in May on traders’ limited purchasing volumes in the month. According to statistics by CBI China, traders’ import purchasing volumes in May is about 30,000 tonnes, while the figure was 63,000 tonnes in April. This, along with an absence of domestic new capacities, make participants’ expectation changed from oversupply to phasic supply shortage.
In addition, plunged crude oil prices weaken high costs’ supports to SM prices.
In view of the decreasing costs, possible supply shortage and strong downstream demand, we hope the SM market to shrug off current bearish sentiment and move on an upward track in the future.